Okay, I've seen enough chain letters discussing the cause of our economic woes, and they're all incorrect, so I figured it was time to write one that addressed the real issues. I've written this in plain English and have taken out any technical mumbo-jumbo so people will be able to understand it clearly. So, even though I will be leaving out some details everything in this message will be fundamentally true.
Okay, if you want to understand the problem we have with money in this country, you're going to have to understand 3 things:
1. Who makes our money.
2. How money comes into existence.
3. Inflation is nothing but a tax.
Let's tackle the first part:
PART I - Who Makes Our Money?
Here are 2 different $100 Bills. One has a red seal, the other a green seal.
Notice the top of this bill. It says United States Note. That means it is a note issued by the United States.
Now notice the top of this bill. It says Federal Reserve Note. That means it is a note issued by the Federal Reserve. It is NOT issued by the United States at all.
Well, who is the Federal Reserve? Aren't they part of the government you might ask? The answer to that is no. The Federal Reserve is a private company, just like Federal Express. And it is no more federal than Federal Express is.
Now both of these $100 Bills cost 4 cents to produce. In the old days the govt would simply print up a red seal $100 United States Note for 4 cents and spend the money on something it wanted. Not anymore. Today, the Federal Reserve gets to produce the $100 Bill for 4 cents and then sells the $100 Federal Reserve Note to the US Government for $100 Face Amount.
That bears repeating. The Federal Reserve (a private company) gets to produce slips of paper for 4 cents ($100 Bills) and then sells those pieces of paper to the US Govt for $100 Face Amount.
Now since the government doesn't have any money of its own how does it buy these Federal Reserve Notes? It pays for them with debt: Treasury Bonds, Treasury Notes, & Treasury Bills. If you read the paper or listen to the nightly news you'll hear the media say things like "The Fed injected liquidity into the markets..." or "The Fed is buying government securities..." All this means is that the Federal Reserve is literally creating money out of thin air and then selling this money to our government for its face amount. This is the true source of our National debt, and this is the reason our debt never goes down.
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